A Financial Rescue Plan Takes Shape

President George W. Bush meets with congressional leaders in the Cabinet Room at the White House on September 25, 2008. Photo by David Bohrer / White House.

Just two days after the House of Representatives voted down the $700 billion financial rescue plan and triggered a record fall by the Dow, the Senate passed a package brimming with sweeteners to attract enough supporters on a second go-round in the house. On Friday, October 3, 2008, the rescue bill was approved by the House and sent on to the president for his signature. AEI scholars have been reporting on the crisis and monitoring the shape and substance of the administration's proposal and the alternatives. While the administration's willingness to consider bold action was useful, many of the provisions in the package were cause for concern. Procedural and political considerations will dominate the discussions in the hours and days to come, and some hard questions need to be answered so that we are able to protect the financial system and taxpayers.

• R. Glenn Hubbard, Hal Scott, and Luigi Zingales argued that the plan needed more protection for taxpayers, a condition that was met.
• Vincent R. Reinhart underscored the urgency of passing the bailout plan but emphasized the need for oversight of the Treasury, which was incorporated into the final deal.
• Alex J. Pollock, Desmond Lachman, and Peter J. Wallison assessed the bailout and offered recommendations to improve it.
• John H. Makin addresses the crisis in his latest Economic Outlook.
• Wallison and Charles W. Calomiris argue in the September Financial Services Outlook that a repeat of the Fannie and Freddie disaster could be prevented by eliminating the government-sponsored enterprise model.
• For more background and commentary from AEI scholars, visit www.aei.org/FinancialCrisis/.

Click here for AEI scholars who are available to comment on the financial crisis.

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